Menu CEO talks recalls

Paul Henderson calls for industry-wide cooperation and action

["The MARC recall affected as many as 11 petfood manufacturers and is a watershed moment in the petfood industry.", "We are producing products with industry leading quality."]

Why baffled?

Why was the entire petfood industry baffled by the inclusion
of melamine and related compounds in petfood ingredients? The
Chinese have reportedly been adding melamine to plant protein
products for several years. Who should have checked up on these
Chinese suppliers?

Henderson
: At the recent Global Food Safety & Quality Conference,
Dr. David Acheson, assistant secretary for food protection at
the US Food and Drug Administration (FDA), said, "Melamine was
an out-of-the box risk FDA had not thought about. There was not
even a definitive analysis measure for melamine." We at Menu
were also unaware of any reports that melamine or related
compounds were suspected as a component to the vegetable
proteins used by the human or petfood industries. Since the
incident, Menu no longer sources vegetable proteins from China,
and we test all vegetable proteins for melamine.

It is wrong to characterize the melamine and related
compounds (MARC) recall as a failure of supplier quality
programs. It was the result of a fraudulent act by Chinese
suppliers that no one could have anticipated.

Mars' intentions

Given Mars recent tendency to purchase companies recovering
from a major setback, has Mars shown interest in purchasing
Menu?

Henderson
: On August 9, 2007, Menu announced that we entered into
agreements to release Mars from certain contractual obligations
to purchase product from Menu and to sell Mars our production
facility in North Sioux City, South Dakota, USA. We believe
this is in the best interests of our company and our unit
holders. Going forward, we will meet our expected customer
demand through our three remaining facilities. Menu will
receive a total of US$26.3 million under the terms of these
transactions, which will be used to reduce indebtedness with
secured lenders. The release is effective immediately, and the
plant sale is expected to close about October 1, 2007.

Supplier relationships

How has the recall changed your relationships with your
suppliers?

Henderson
: We are part of a global economic environment where it is
common to source suppliers worldwide. Manufacturers all have to
heighten our awareness to ensure we work with the best
suppliers available. Menu has made changes in our own processes
and we suspect that many other companies and industries are
doing the same.

The entire industry was affected by the fraudulent acts of
the Chinese wheat gluten suppliers. The globalization of the
animal and human food supply systems is a fact. But this trend
in globalization brings new challenges, requires new
safeguards, the resources to implement them and a new
determination to strengthen our controls. Such an initiative
demands industry-wide cooperation and action.

I can tell you that Menu Foods no longer sources plant
proteins from China and we are actively looking at new US and
European suppliers for other ingredients that have been
traditionally provided by Chinese suppliers.

Most surprising

What surprised you the most about this entire ordeal?

Henderson
: The fraud by the Chinese suppliers was a surprise to the
entire industry. No one in this industry suspected melamine. It
just hasn't ever happened before and none of the industry
standard tests, which we all used, could have detected it. To
our knowledge, no petfood or human food manufacturer had ever
tested wheat gluten for melamine prior to this.

As pet owners ourselves, it was difficult. We were very
saddened by the events. It is a complex story. The MARC recall
affected as many as 11 petfood manufacturers and is a watershed
moment in the petfood industry.

Media assessment

What's your opinion of the media's handling of the
situation?

Henderson
: From the moment we announced the first recall, media coverage
has been extensive and for a time it seemed almost constant.
While there were more than a few instances of erroneous
reporting, the fact remains that the coverage did facilitate
the publication of all brands affected. This helped pet owners
identify and return contaminated products listed in the recall.
So that was good.

Essential communication

From a communications perspective, what are the most
important things to do in a situation like the recall
crisis?

Henderson
: We work to get as much useful information to our customers as
quickly as possible. Our direct sales force is made up of
industry veterans who understand the importance of trust
between customer and supplier. With the support of our
technical staff, they worked with our customers to understand
and implement the recall and then to explain in detail to our
customers and potential customers our quality assurance
efforts. We are dedicated to getting the word out that we are
producing products with industry-leading quality.

Greed and melamine

Melamine is a nitrogen-rich chemical that Chinese wheat
gluten suppliers added surreptitiously to foods to make
them look higher in protein than they really are. Melamine
is polymerized with formaldehyde to make melamine resin
(melamine formaldehyde is frequently called melamine,
although it is not the same). Crystallization and washing
of melamine generates a considerable amount of waste water,
which is a pollutant if discharged directly into the
environment. The waste water is often concentrated into a
solid for easier disposal.

This solid waste by-product of melamine synthesis is
what has been referred to in news stories as "melamine
scrap" and is the melamine rich substance added to the
Chinese wheat gluten that wound up in petfood. This scrap
is mainly melamine (70%) but contains a significant amount
of the oxytriazines, among them, cyanuric acid. One of the
leading theories of how pets were harmed is related to this
combination of melamine and cyanuric acid. It's known that
melamine and cyanuric acid can form networks of hydrogen
bonds, creating a tile-like planar structure through
molecular self-assembly. Evidently, these two relatively
non-toxic materials when combined can interfere
sufficiently with kidney function to produce the pet
deaths.

Apparently, the corrupt Chinese manufacturers got too
greedy. They went from substituting melamine for protein to
substituting the much cheaper melamine scrap for protein
and big trouble ensued.